Why don’t negligent parties foot the bill for victims’ care?

When care needs are due to another’s negligence, who should pay? Most would say the negligent party (or their insurers). However, legal rules sometimes lead to councils having to foot the bill.

Why do local authorities have to pay?

For accident victims who require residential care, the courts have held that certain personal injury awards are to be ignored for charging purposes. This means courts hearing compensation claims sometimes do not award compensation for the costs of future local authority residential care.

If they did, the award being ignored for charging purposes would not be spent on such care and the victim would have an unjustified windfall.

Therefore, these victims are left to rely on local authority services. The main issue in this case was whether a similar result can be expected where an accident victim requires care at home.

How did this case arise?

As a child, C had negligent NHS treatment and suffered brain damage. A compensation claim was made when C reached adulthood. The NHS admitted negligence but said it should not pay for his future care.

The High Court held that C’s home care would cost £120,000 a year, but that his council would provide £70,000 of this free of charge. This left only £50,000 a year for the NHS to fund. Given C’s life expectancy, this saved the NHS about £1.5m. C appealed to the Court of Appeal.

What did the Court of Appeal decide?

It held that the High Court had partly misunderstood the rules on charging for home care. It had correctly decided that the capital in C’s award would be ignored for charging purposes. But it had incorrectly assumed, without evidence, that income from the capital would also be ignored. The case was returned to the High Court.

Was the court happy with this result?

No. It saw “no good policy reason” for what is effectively a local authority subsidy for insurers. However, the court felt unable to do anything about it given the current legislative structure.

Will insurance companies always avoid paying for care?

Absolutely not. This is why it is important for councils to engage with the legal teams of accident victims who are seeking compensation. Sometimes local authority care will not meet a claimant’s “reasonable requirements”. In such a case, compensation should be awarded so that suitable care can be purchased on the open market.

The courts have accepted arguments that local authority care would not be sufficient for a number of reasons: the inherent uncertainty as to the nature of local authority care year on year (given the pressures on budgets) and the principles of empowerment (claimants have more control over the delivery of care if it is being funded directly by them).

What is the government doing?

The Department for Constitutional Affairs has recently issued a consultation paper entitled The Law on Damages. This invites views on whether the law should be changed so that the negligent party always bears the full cost of future care.